Rival drug-pricing bills steer savings to Medicare, Medicaid to woo votes
AS THEY JOCKEY to position their drug-pricing bills, House and Senate leaders are sweetening their respective pots by pledging to use potential savings to fund various Medicare and Medicaid programs.
Senate Finance Chair Chuck Grassley (R-Iowa) and ranking Democrat Ron Wyden of Oregon last week added several measures to their drug-pricing package, saying they’d use savings to cancel two years of cuts to disproportionate-share hospital payments, as well as fund healthcare extenders.
A day earlier, House Democratic leaders said they would use savings from a competing bill to expand Medicare benefits, increase financial assistance for low-income beneficiaries, fund community health centers, and combat drug shortages, among other things. A floor vote is expected this week in the House.
Changes to the Grassley-Wyden bill would reduce costs for beneficiaries who exceed their deductible but do not reach the catastrophic phase of the Medicare Part D benefit; allow Medicare beneficiaries to spread pharmacy drug costs over time; allocate discounts more evenly across drugmakers; and pass price concessions negotiated by pharmacies to consumers. Most of the changes would take effect in 2022, but the new Part D benefit structure would be fully implemented in 2024.
Senate Finance Committee aides said they had not received a score on their revised bill from the Congressional Budget Office. A preliminary estimate of the original bill showed it would save the federal government more than $100 billion over 10 years. House leaders claim their legislation will save $500 billion over the next 10 years, according to guidance they received from the Congressional Budget Office. They did not provide any further details about the CBO analysis.
Grassley and Wyden proposed using savings from their bill to cancel cuts to disproportionate-share hospital payments for fiscal 2020 and 2021 but keep cuts of $8 billion per year in place for 2022 through 2025. The bill would require provider-level transparency for non-DSH supplemental payments.
The bill also included a permanent extension of Medicaid’s Money Follows the Person Rebalancing Demonstration; a two-year extension of funding for the Community Mental Health Services Demonstration Program that would add 11 states; and a four-year extension of increased funding for Medicaid block grants to U.S. territories.
In Medicare, the savings would permanently fund the Medicare-Dependent
The revised Grassley-Wyden bill does not include a policy that would pass rebates paid by drugmakers directly to patients at the pharmacy counter.
Hospital Program and the increased low-volume adjustment, and provide additional funding for the CMS’ quality measurement endorsement program in fiscal 2020 through 2022.
For their part, House leaders pledge to use purported savings to add vision, dental and hearing coverage to Medicare Part B. They also aim to expand both eligibility for low-income subsidies in Medicare and financial assistance with out-of-pocket expenses. Community health centers would receive $10 billion of funding for capital improvements and capacity building.
The White House backed the Grassley-Wyden bill as the best vehicle for a drug-pricing deal this Congress, as opposed to Pelosi’s package, which Domestic Policy Council chief Joe Grogan has called unworkable and hyperpartisan.
Grassley and Wyden retained the most controversial provision in their legislation, which would require drug companies to pay back Medicare if they hike drug prices faster than inflation. Some Republican senators equate the provision to government price controls, while Grassley has tried to spin it as limiting entitlement spending.
Notably, the revised Grassley-Wyden bill does not include a policy passing rebates paid by drugmakers directly to patients at the pharmacy counter. Both senators had said during the markup of the drug-pricing bill that they intended to include some form of a point-of-sale rebate proposal in a subsequent version of the package, but they backed off.
Finance Committee aides said they ran into some of the same problems the White House had when it failed to advance a point-of-sale rebate rule because the Congressional Budget Office estimated it would cause Medicare Part D premiums to rise. Hospitals and insurers detested the administration’s proposal.